NZ central bank watching how much weaker demand would offset price increases

By Stella Qiu ‌and Lucy ​Craymer

WELLINGTON, ​May 28 (Reuters) - New Zealand's central bank is watching how much weaker demand from ‌higher energy costs would hold back other price ⁠increases, a key determinant for how high interest rates ‌will go, a top ‌central banker said on Thursday.

Appearing before lawmakers, Anna Breman, Governor at the Reserve Bank of ​New Zealand, said households were turning more cautious and it was unclear if businesses would ⁠be able to pass on higher costs en masse.

• "We want New ​Zealanders to feel that we're fully focused on bringing inflation back to target," Breman ​told the parliamentary committee. She ‌added, however, they remained focused on economic development and they would try ⁠to bring inflation back within the 1% to 3% band without causing unnecessary volatility.

• Breman said fuel prices ⁠were currently the major impact on inflation data but ​they were keeping an eye on how higher fuel and transport costs were feeding through to other products.

• The ‌RBNZ held interest rates steady at 2.25% on Wednesday in a knife-edge decision ‌and warned rate hikes would come sooner and ⁠by more than ‌expected to counter ​a war-driven global energy shock.

(Reporting by Lucy Craymer and Stella Qiu; Editing by Nia ‌Williams)

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